Home › Financial Guidance › Family & Money
You and your future spouse are not only in a romantic relationship—you are in a financial relationship, too. As a result, you'll need to address several questions: How far will you go in merging your finances? Should you have a joint checking account, separate accounts, or both? Who will pay the bills? If you're both working, whose employer–provided health plan should you use? Perhaps most important, when it comes to spending and taking on debt, do you have similar attitudes-and, if not, what's a sensible compromise?
As you tackle the financial issues that come with marriage, here are some steps you may want to consider:
Disclose Everything
To get off on the right foot, you should probably each disclose everything about your finances, including portfolio balances and debts. For example, if one or both of you have a lot of debt, tell your partner how much it is and how you plan to pay it off or reduce it to a manageable level. If there is a substantial difference in your net worth or this is a second marriage for one or both of you, you may want to consider a prenuptial agreement.
Decide Who Pays the Bills
To cover the utilities, rent or mortgage, groceries, and other shared expenses, you might want to consider setting up a joint checking account. Each of you may also want your own bank account and credit cards that you can use for your own spending. However, be careful about applying for too many credit cards: depending on how you manage your debt, that could hurt your credit score.
Save on Benefits
If you're both working, you may be able to save money by eliminating any duplication of health care benefits. Take the time to figure out who has the best coverage for the cost involved. Review your benefits to find other offers, like life insurance for your spouse at a reduced cost, for example.
Change Beneficiary Designations
While you're dealing with employee benefits, consider whether you should change the beneficiaries listed on your company-paid life insurance or on your employer's retirement plan. You may want to revise the beneficiaries on any individual retirement accounts (IRAs) and any individual life insurance policies. Remember, these beneficiary designations—and not your will—typically determine who inherits these types of assets. In certain states, written spousal consent is required if the designated beneficiary of your retirement account is someone other than your spouse. Also, if either of you has a new name, you'll need to change employee records and contact investment companies, banks, and the Social Security Administration. Don't forget to change the name on your driver's license, passport, and credit cards.
Rethink Your Life Insurance
You may need insurance beyond what your employer provides—especially if one spouse is coming to the marriage with dependents, if you intend to have children, or if you plan to take out a mortgage to buy a home together. Also, having life insurance through work has some upsides like possibly being less expensive than buying it “in the market”. One thing to consider when buying life insurance through work is if you separate from the company, that coverage could end, and buying new insurance may be more expensive if you can even get it due to health issues, and if it is possible, it most likely will be more expensive than through the employer.
Write Wills
Depending on your state and the type of assets you have, if this is a first marriage, simple wills may suffice initially. If there are children from earlier marriages, you may need to engage in more sophisticated estate planning. Discuss with an estate planning attorney if a revocable living trust would be appropriate for your situation.
Watch the Tax Bill
If you both work, you could be unpleasantly surprised to find that your income tax bill may be higher as a married couple than if you had stayed single. Consider speaking with your tax advisor to understand the potential impact on you and your spouse.